Tag Archives: NASDAQ:VRA

Vera Bradley: Zacks’ Bear of the Day Play

Vera Bradley, Inc. (VRASnapshot Report) hasn’t been able to figure out how to turn around its sluggish business. This Zacks Rank #5 (Strong Sell) is expected to see falling earnings in fiscal 2016.

Vera Bradley sells women’s handbags and accessories with its distinctive pattern designs. It operates full-line and factory outlet stores in the United States and on verabradley.com and sells in 2,700 specialty retail stores, mostly in the United States.

Outlook Remains Challenged

On Mar 11, Vera Bradley reported fourth quarter results and missed on the Zacks Consensus by 2 cents. Earnings were $0.43 versus the Zacks Consensus of $0.45.

Vera Bradley described business trends as remaining “difficult.” It had expected that some of its initiatives to improve the business would be showing some results but that hasn’t been the case.

It said both traffic and sales remained “extremely challenging.”

Comparable Store Sales Sank in Q4

Vera Bradley has been struggling for some time. It has tried moderating its patterns and has even gone to some leather handbags and accessories as leather has been popular.

But in the fiscal fourth quarter, comparable sales, which included e-commerce, fell 14.4%. It was even worse if you just look at the stores. Comparable store sales fell 20.7% while e-commerce sales fell just 7.3%.

Sales fell as store traffic declined.

This was the holiday quarter. The last thing a retailer wants to see if declining foot traffic.

Fiscal 2016 Estimates Slashed

Not surprisingly, the analysts are bearish on Vera Bradley for this fiscal year.

7 estimates have been cut in the last week pushing the fiscal 2016 Zacks Consensus Estimate down to $0.83 from $1.23.

That’s an earnings decline of 18% from fiscal 2015.

One analyst is even worried about next year as 1 estimate was just cut for fiscal 2017 in the last week as well.

Shares at Multi-Year Low

Shares plunged on the earnings report but even though they are at multi-year lows, they’re not exactly cheap.

Vera Bradley is still trading with a forward P/E of 18.7 which is above the average of the S&P 500 at 17.7x. You’re not getting a bargain bin stock at these levels.

Retail is a very difficult industry right now. There are many haves and have-nots.

If you really want to own a specialty retailer, you might want to consider DSW Inc. (DSWSnapshot Report). It’s a Zacks Rank #2 (Buy) and is expected to grow earnings by 9.8% this year. Want More of Our Best Recommendations?

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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Vera Bradley: Zacks’ Bear of the Day Play

Vera Bradley (VRASnapshot Report) is a designer, producer, marketer and retailer of stylish and functional accessories, including handbags, accessories, and travel and leisure items for women. It is well known for its stylish designs with distinctive and colorful fabrics and trims.

 

Founded over 30 years ago by Patricia R. Miller and Barbara Bradley, the company is now headquartered in Fort Wayne, Indiana. It started trading publicly on October 21, 2010. The company sells its products directly as well as through independent retailers and third party e-commerce sites.

Disappointing Quarterly Results and Guidance

On December 10, Vera Bradley announced financial results for its fiscal third quarter ended November 1. Net revenues for the quarter were $125.2 million—in the mid-range of guidance of $123 million to $128 million—but below street consensus. Gross profit totaled $65.8 million or 52.5% of net revenues, compared with $71.2 million or 55.2% of net revenues in the prior year quarter.

Income from continuing operations was $8.7 million, or $0.21 per share, down from $15.7 million, or $0.39 per share, in the same quarter a year ago. The earnings were however ahead of the Zacks Consensus Estimate of $0.19 per share.

For the fourth quarter, the management expects net revenues to be in the range of $158 million to $163 million, reflecting weaker than expected selling during the quarter.  They expect earnings to be in the range of $0.43 to $0.47 per share.

Downward Revisions

Quarterly and annual estimates have been revised downwards in the past few weeks after results. Zacks consensus estimate for the current fiscal year and the next fiscal year now stand at $1.02 per share and $1.21 per share down from $1.05 per share and $1.30 per share, 60 days ago. Sliding estimates sent VRA back to Zacks Rank # 5 (Strong Sell).

The Bottom Line

While the company has made some progress in modernization its product assortment and expanding its reach through new store openings, it faces many near-term challenges in the transformation process.

 

Highly promotional retail environment and declining store traffic continues to pose headwinds for them. But the industry outlook may brighten once the consumers start spending the dollars they are saving from lower gas price. Retail—Apparel/Shoes industry is currently ranked 101 out of 265 Zacks industries.

Investors looking for a better play in this industry could consider Tillys—a Zacks Rank #1 (Strong Buy) stock, which recently delivered an earnings surpriseof 64%. The stock has seen positive earnings momentum after excellent results and upgraded guidance.

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Vera Bradley: Zacks’ Bear of the Day Play

Vera Bradley (VRA – Snapshot Report) is a designer, producer, marketer and retailer of stylish and functional accessories, including handbags,travel and leisure items for women. It is well known for its stylish designs with distinctive and colorful fabrics and trims.

Founded over 30 years ago by Patricia R. Miller and Barbara Bradley, the company is now headquartered in Fort Wayne, Indiana. It started trading publicly on October 21, 2010. The company sells its products directly as well as through independent retailers and third party e-commerce sites.

Disappointing Quarterly Results and Guidance

On June 5, Vera Bradley announced its financial results for its fiscal first quarter ended May 3, 2014. Net revenues for the quarter were $113.5 million down from $123.0 million in the prior year quarter. Net income came in at $6.6 million, or $0.16 per share, compared to net income of $9.2 million, or $0.23 per share, year ago quarter.

According to the management “we continue to face a difficult environment, one that is proving much more challenging than we anticipated just two short months ago”.

“Direct segment revenues are weaker than we expected,” and “sales from existing customers have been relatively stable, but our traditional patterns and products simply are not attracting enough new customers to our brand, and overall traffic is down substantially”.

“Until we can make meaningful changes to our product offering and marketing initiatives, we don’t expect these sales trends to substantially improve”.

The company also lowered the guidance for the current quarter and the year. For the second quarter of fiscal 2015, they expect net revenues to be in the range of $113 million to $120 million compared to prior year second quarter revenues of $125.4 million. They expect gross margin rate to range from 53.5% to 54.0% down from 57.2%.

Downward Revisions

Quarterly and annual estimates have been revised sharply downwards in the past few weeks.

Zacks consensus estimate for the current fiscal year and the next fiscal year now stand at $1.10 per share and $1.31 per share down from $1.26 per share and $1.54 per share. Sliding estimates sent VRA to Zacks Rank # 5 (Strong Sell).

The Bottom Line
Challenging consumer environment continues to pose headwinds for retailers. “Retail—Apparel/Shoes” industry is currently ranked 186 out of 265 Zacks industries. Investors looking for exposure to this industry could consider Christopher & Banks (CBK)—a Zacks Rank #1 (Strong Buy).

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